West Oxford Community Renewables (WOCR) will inaugurate two of the largest PV installations in the UK on Thursday 24th June on large roofs within the Oxford area. Matthew Arnold secondary school boasts a new 100 kW array while a local Aldi store has a 52kW installation. Other local buildings will take the total up to 250kw within a few weeks. In an extraordinarily impressive achievement, this recently founded business has raised the best part of £1m to fund the new arrays.
The finances of the Aldi store demonstrate the returns available to investors in PV installations under the new feed-in tariffs. 281 solar panels have been placed on the newly constructed store. The roof is almost south-facing but not quite steep enough for maximum production. Joe Michaels of JoJu, the company that carried out the work , told me that the site would produce about 44,200 kilowatt hours a year, about 90% of the absolute maximum achievable in Oxford for 52kW array, pointing due south and tilted at 41% to the horizontal.

The electricity production creates two streams of income for WOCR. First, the power generated will achieve feed in payments of 31.4 pence per kWh. Second, the store owner pays WOCR for the electricity supplied to the store. All the power produced will be used by Aldi, so there will be no third source of income from the export tariff set up under the feed-in system.

For obvious reasons,WOCR was reluctant to give me a firm estimate of the full cost of the whole system. Today’s small domestic PV installations cost about £5,000 per kilowatt of peak capacity. My guess is that the Aldi installation probably cost about £4,000 per kilowatt, or about £208,000 for the full installation. The lower cost is because of the benefits of installing large numbers of panels on a single roof, helping keep down labour costs. The actual price may have been even lower because the Aldi roof was initially designed and constructed to easily accept the PV array. Joe Michaels told me that about 50% of the total cost was the panels themselves, supplied by Amerisolar, a US company, but made in China. About half the rest of the cost was labour and overhead and the remainder is the electronics necessary to convert low voltage DC into grid-compatible AC current.

The streams of income will be

Source of income

Amount

Comment

Feed in payment of 31.4 pence on 44,200 kWh

£13,879

Guaranteed for 25 years, inflating at price inflation

Payment by Aldi (my guess)

£4,420

This is commercially confidential but I assume that Aldi is paying slightly below the current ‘green’ rate for electricity

Total

£18,299

Less maintenance

£1,000

Estimated

Net income from installation

£17,299

Equivalent to a return of about 8.6% on the investment

The 8.6% return is inflation-linked and the guaranteed feed in income will continue for 25 years. After the point, returns are likely only to come from the value of the electricity sold to Aldi. Most panels will last over 30 years with some degradation in performance in later years. WOCR may choose to replace the PV at some point, meaning the installation may continue to produce income for many decades. While these levels return are not likely to excite commercial investors, they will provide a good income for people saving for pensions or other long-term savings needs.

Joe commented that the planning process had been simple and well handled by Oxford City Council, taking about 8 weeks. He was similarly complimentary about the actions of Scottish and Southern, the local electricity network company. The negotiations between Aldi and WOCR had taken about fourteen months, principally because of the newness of the concept. This is a pathbreaking installation and we will see many more similar arrays.